Health insurance exchange unveils 4 tiers

The coverage options offered in the Covered California insurance exchange reflect the requirements of President Barack Obama's health overhaul law, which for the first time sets a minimum level of benefits that must be included in health plans purchased directly by individuals.

The exchange will offer four basic plans, ranging from least to most generous. In the Bronze plan, which is the cheapest, an enrollee would pay 40 percent of his average medical expenses until he reached an annual $6,350 out-of-pocket maximum. In the Platinum plan, which is the most expensive, the patient would pay 10 percent of her medical expenses until she hit the $4,000 out-of-pocket limit.

Even as Thursday's unveiling of insurance carriers and rates was lauded as a big step forward in the implementation of health overhauls, some raised concerns that the non-participation of many insurance companies – including some of the state's biggest – has troubling anti-competitive implications.

"There are only three statewide health insurers selling in Covered California, which means less statewide competition than we had hoped to see in the new marketplace," said California's Insurance Commissioner Dave Jones. He noted that such "major national health insurers" as Aetna, United Healthcare and Cigna were not participating.

The rates submitted so far by participating insurance companies show considerable variation in prices for similar benefit packages. For a single 40-year-old living in Orange County, for example, the monthly premium on a Bronze plan would range from $217 for the exclusive provider organization care offered by Anthem Blue Cross to $287 for Health Net's PPO.

At the upper end, Health Net's platinum HMO would cost $324 a month, while Kaiser Permanente would charge $438.

Because the plans in each of the four tiers must offer the same basic benefits, price could become more of a factor in consumers' choices when enrollment in the exchange opens on Oct. 1.

The exchange is intended for individuals whose employers either offer no coverage or offer coverage that is unaffordable – defined as a plan in which the employee's share of the premium exceeds 9.5 percent of his total household income.

Employers who fail to offer any coverage must pay a penalty equal to $2,000 for every full-time employee, minus the first 30 employees. Employers who offer plans that are either not affordable or do not include the minimum required benefits must pay a penalty of $3,000 per year for each employee who gets a subsidy through the exchange.

The law also requires individuals to have coverage whether their employers offer it or not. With a few exceptions, people who do not have health coverage will have to pay a tax penalty next year of $95 or 1 percent of household income, whichever is higher. The penalty rises sharply in 2015 to $325 per person, or 2 percent of household income; then to $695, or 2.5 percent of income, in 2016.

The tax subsidies that will be available to about half of those shopping in the exchange is an added incentive for them to buy insurance, although the cost even of subsidized insurance could easily exceed the penalty for many people. Single adults with annual income up to $45,960 will get some amount of tax credit, and for a family of four it phases out at $94,200.

All of the plans include the minimum benefits mandated by the Affordable Care Act. The 10 "essential health benefits" stipulated there are:

Paul Markovich, president and chief executive officer of Blue Shield of California, discusses Covered California, the state agency running the state's new health exchange, at a news conference in Sacramento, Calif., Thursday, May 23, 2013. Blue Shield will be among the 13 companies offering competing polices to millions of Californians who are expected to purchase coverage under President Barack Obama's Affordable Care Act. AP

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